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In a South Carolina federal court, three executives at a medical testing laboratory were found liable for a huge Medicare fraud in a whistleblower lawsuit.
The head of Health Diagnostics Laboratory, a South Carolina medical testing company, along with two other employees, have been found liable for $17 million of Medicare fraud in a whistleblower suit concluded earlier this month.
The whistleblower lawsuit succeeded in getting the executives to be found liable for $17 million of damages. Under the False Claims Act, the ex-executives may have to pay triple that amount in damages, totaling $51.2 million.
Health Diagnostics Laboratory carries out lab work for doctors’ offices, including blood tests. According to the Health Diagnostics whistleblower lawsuit, the three employees agreed to pay a $20 kickback to each doctor who referred specific kinds of work to the laboratory. As a result of the incentive, the involved doctors allegedly ordered over 35,000 unnecessary tests.
In August of 2105, the Department of Justice joined the whistleblower lawsuit, claiming that doctors across the country had been receiving kickbacks from Health Diagnostics Laboratory. The DOJ also claims that Tricare, a veterans’ health care program was defrauded, along with Medicare.
In the trial, the three former Health Diagnostics Laboratory executives claimed that initially, they were acting with no illegal intent, and only followed bad advice. However, the whistleblower lawsuit succeeded in arguing otherwise. In the trial, the ex-executives were shown to have “continued to pay kickbacks even after they received a growing flood of warnings and corrected legal advice,” according to a statement by Mayes’ lawyer, Peter Hatfield of Phillips & Cohen, to Law360.
Ex-marketing executives Floyd Dent and Robert Johnson own the company BlueWave Healthcare Consultants. Dent and Johnson were found liable, but their company was not.
Health Diagnostics Laboratory did not entirely escape repercussions. The whistleblower lawsuit implicated the medical testing laboratory in the conspiracy to pay kickbacks to doctors, along with the three ex-executives. Health Diagnostics Laboratory agreed to pay $47 million to settle its role in the case in April of 2015.
The conjoined Whistleblower Lawsuit cases are U.S. ex rel. Mayes v. Berkeley HeartLab Inc. et. al., Case No. :11-cv-01593, and U.S. ex. rel. Lutz et. al. v. Health Diagnostics Laboratory Inc. et. al., Case No. 9:14-cv-00230, in the U.S. District Court for the District of South Carolina.
In general, whistleblower and qui tam lawsuits are filed individually by each plaintiff and are not class actions. Whistleblowers can only join this investigation if they are reporting fraud against the government, meaning that the government must be the victim, and that the alleged fraud should be a substantial loss of money.
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If you believe that you have witnessed fraud committed against the government, you may have a legal claim. Whistleblowers can only join this investigation if they are reporting fraud against the government, meaning that the government must be the victim, and that the alleged fraud should be a substantial loss of money.
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